Skip to main content Accessibility help
×
Hostname: page-component-586b7cd67f-l7hp2 Total loading time: 0 Render date: 2024-11-20T13:29:20.690Z Has data issue: false hasContentIssue false

1 - Understanding Deep Decarbonisation over the Long Run

Published online by Cambridge University Press:  01 February 2024

Grégory Claeys
Affiliation:
Bruegel
Marie Le Mouel
Affiliation:
Bruegel
Simone Tagliapietra
Affiliation:
Bruegel
Guntram B. Wolff
Affiliation:
German Council on Foreign Relations
Georg Zachmann
Affiliation:
Bruegel
Get access

Summary

This chapter illustrates how economists have traditionally thought about decarbonisation. It notably provides an overview of the structure and key assumptions of Integrated Assessment Models, the main tool used by economists to model climate–economic interactions, with the aim of discussing their main policy lessons with regard to the macroeconomic implications of decarbonisation.

Type
Chapter
Information
The Macroeconomics of Decarbonisation
Implications and Policies
, pp. 12 - 42
Publisher: Cambridge University Press
Print publication year: 2024

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D., Aghion, P., Bursztyn, L., and Hemous, D. (2012) ‘The Environment and Directed Technical Change’, American Economic Review, 102:1, 131–66, https://doi.org/10.1257/aer.102.1.131Google Scholar
Acemoglu, D., Akcigit, U., Hanley, D., and Kerr, W. (2016) ‘Transition to Clean Technology’, Journal of Political Economy, 124:1, 52104, https://doi.org/10.1086/684511Google Scholar
Acevedo Mejia, S., Mrkaic, M., Novta, N., Pugacheva, E., and Topalova, P. B. (2018) The Effects of Weather Shocks on Economic Activity: What Are the Channels of Impact? (Rochester, NY: Social Science Research Network), https://doi.org/10.2139/ssrn.3221232Google Scholar
Aghion, P., Veugelers, R., and Hemous, D. (2009) ‘No Green Growth without Innovation’, Bruegel, November 23, www.bruegel.org/2009/11/no-green-growth-without-innovation/Google Scholar
Auffhammer, M. (2018) ‘Quantifying Economic Damages from Climate Change’, Journal of Economic Perspectives, 32:4, 3352, https://doi.org/10.1257/jep.32.4.33Google Scholar
Auffhammer, M., and Mansur, E. T. (2014) ‘Measuring Climatic Impacts on Energy Consumption: A Review of the Empirical Literature’, Energy Economics, 46, 522–30, https://doi.org/10.1016/j.eneco.2014.04.017CrossRefGoogle Scholar
Battiston, S., Monasterolo, I., Riahi, K., and van Ruijven, B. J. (2021) ‘Accounting for Finance Is Key for Climate Mitigation Pathways’, Science, 372:6545, 918–20, https://doi.org/10.1126/science.abf3877CrossRefGoogle ScholarPubMed
Bowen, A., and Albertin, G. (2011) The Economic Impacts of Climate Change Mitigation Policy (London, UK: European Bank for Reconstruction and Development), pp. 2037, www.ebrd.com/pages/homepage.shtmlGoogle Scholar
Brunetti, C., Dennis, B., Gates, D., Hancock, D., Ignell, D., Kiser, E. K., et al. (2021) ‘Climate Change and Financial Stability’, FEDS Notes, www.federalreserve.gov/econres/notes/feds-notes/climate-change-and-financial-stability-20210319.htmGoogle Scholar
Burke, M., Hsiang, S. M., and Miguel, E. (2015) ‘Global Non-linear Effect of Temperature on Economic Production’, Nature, 527:7577, 235–39, https://doi.org/10.1038/nature15725Google Scholar
Cai, Y., and Lontzek, T. S. (2019) ‘The Social Cost of Carbon with Economic and Climate Risks’, Journal of Political Economy, 127:6, 2684–734, https://doi.org/10.1086/701890Google Scholar
Carleton, T. A., and Hsiang, S. M. (2016) ‘Social and Economic Impacts of Climate’, Science, 353:6304, https://doi.org/10.1126/science.aad9837Google Scholar
Carleton, T. A., Jina, A., Delgado, M. T., Greenstone, M., Houser, T., Hsiang, S. M., et al. (2020) ‘Valuing the Global Mortality Consequences of Climate Change Accounting for Adaptation Costs and Benefits’, NBER Working Paper No. 27599, p. 57.Google Scholar
Ciscar, J.-C., and Dowling, P. (2014) ‘Integrated Assessment of Climate Impacts and Adaptation in the Energy Sector’, Energy Economics, 46, 531–38, https://doi.org/10.1016/j.eneco.2014.07.003Google Scholar
Climate Action Tracker (2021) ‘Glasgow’s 2030 Credibility Gap: Net Zero’s Lip Service to Climate Action’, https://climateactiontracker.org/publications/glasgows-2030-credibility-gap-net-zeros-lip-service-to-climate-action/Google Scholar
Dell, M., Jones, B. F., and Olken, B. A. (2012) ‘Temperature Shocks and Economic Growth: Evidence from the Last Half Century’, American Economic Journal: Macroeconomics, 4:3, 6695, https://doi.org/10.1257/mac.4.3.66Google Scholar
Dell, M., Jones, B. F., and Olken, B. A. (2014) ‘What Do We Learn from the Weather? The New Climate-Economy Literature’, Journal of Economic Literature, 52:3, 740–98, https://doi.org/10.1257/jel.52.3.740Google Scholar
Deryugina, T., and Hsiang, S. (2014) ‘Does the Environment Still Matter? Daily Temperature and Income in the United States’, NBER Working Paper No. 20750, https://doi.org/10.3386/w20750Google Scholar
Estrada García, A., and Santabárbara García, D. (2021) Recycling Carbon Tax Revenues in Spain: Environmental and Economic Assessment of Selected Green Reforms (Madrid: Banco de Espana), https://repositorio.bde.es/handle/123456789/16552Google Scholar
European Central Bank (2021) Climate-Related Risk and Financial Stability: ECB/ESRB Project Team on Climate Risk Monitoring (Brussels: Publications Office of the European Union), https://data.europa.eu/doi/10.2866/913118Google Scholar
European Commission (2020) Stepping up Europe’s 2030 Climate Ambition: Investing in a Climate-Neutral Future for the Benefit of Our People (Brussels: European Commission).Google Scholar
Ferrari, M. M., and Pagliari, M. S. (2021) No Country Is an Island: International Cooperation and Climate Change (Frankfurt: European Central Bank), https://doi.org/10.2139/ssrn.3870019Google Scholar
Financial Stability Board (2020) The Implications of Climate Change for Financial Stability (Basel: Financial Stability Board), p. 35.Google Scholar
Gerlagh, R., and Liski, M. (2018a) ‘Consistent Climate Policies’, Journal of the European Economic Association, 16:1, 144, https://doi.org/10.1093/jeea/jvx010CrossRefGoogle Scholar
Gerlagh, R., and Liski, M. (2018b) ‘Carbon Prices for the Next Hundred Years’, The Economic Journal, 128:609, 728–57, https://doi.org/10.1111/ecoj.12436Google Scholar
Gollier, C. (2021) ‘Efficient Carbon Pricing under Uncertainty’(London: Centre for Economic Policy Research), https://cepr.org/voxeu/columns/efficient-carbon-pricing-under-uncertaintyGoogle Scholar
Golosov, M., Hassler, J., Krusell, P., and Tsyvinski, A. (2014) ‘Optimal Taxes on Fossil Fuel in General Equilibrium’, Econometrica, 82:1, 4188, https://doi.org/10.3982/ECTA10217Google Scholar
Heal, G. (2017) ‘The Economics of the Climate’, Journal of Economic Literature, 55:3, 1046–63, https://doi.org/10.1257/jel.20151335CrossRefGoogle Scholar
High-Level Commission on Carbon Prices (2017). Report of the High-Level Commission on Carbon Prices. World Bank, Washington, D.C, https://doi.org/10.7916/d8-w2nc-4103Google Scholar
IMF (2020) ‘Mitigating Climate Change – Growth- and Distribution-Friendly Strategies’, World Economic Outlook 2020, A Long and Difficult Ascent (Washington, DC: International Monetary Fund), www.researchgate.net/publication/349346129_Mitigating_Climate_Change-Growth_and_Distribution_Friendly_StrategiesGoogle Scholar
Kahn, M. E., Mohaddes, K., Ng, R. N. C., Pesaran, M. H., Raissi, M., and Yang, J.-C. (2021) ‘Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis’, Energy Economics, 104, 105624, https://doi.org/10.1016/j.eneco.2021.105624Google Scholar
Kjellstrom, T., Kovats, R. S., Lloyd, S. J., Holt, T., and Tol, R. S. J. (2009) ‘The Direct Impact of Climate Change on Regional Labor Productivity’, Archives of Environmental and Occupational Health, 64:4, 217–27, https://doi.org/10.1080/19338240903352776Google Scholar
Köberle, A. C., Vandyck, T., Guivarch, C., Macaluso, N., Bosetti, V., Gambhir, A., et al. (2021) ‘The Cost of Mitigation Revisited’, Nature Climate Change, 11:12, 1035–45, https://doi.org/10.1038/s41558-021-01203-6Google Scholar
Krogstrup, W., and Oman, S. (2019) ‘Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature’, IMF Working Paper No. 2019/185, www.imf.org/en/Publications/WP/Issues/2019/09/04/Macroeconomic-and-Financial-Policies-for-Climate-Change-Mitigation-A-Review-of-the-Literature-48612Google Scholar
Lazard (2021) ‘Levelized Cost of Energy, Levelized Cost of Storage, and Levelized Cost of Hydrogen’, Lazard.com, www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/Google Scholar
Nordhaus, W. D. (1992) ‘An Optimal Transition Path for Controlling Greenhouse Gases’, Science, 258:5086, 1315–19, https://doi.org/10.1126/science.258.5086.1315Google Scholar
Nordhaus, W. D., and Boyer, J. (2003) Warming the World: Economic Models of Global Warming (Cambridge, MA: MIT Press).Google Scholar
OECD (2021) Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading (Paris: OECD), https://doi.org/10.1787/0e8e24f5-enGoogle Scholar
Ouazad, A., and Kahn, M. E. (2019) ‘Mortgage Finance and Climate Change: Securitization Dynamics in the Aftermath of Natural Disasters’, NBER Working Paper No. 26322, https://doi.org/10.3386/w26322CrossRefGoogle Scholar
Pindyck, R. S. (2013) ‘Climate Change Policy: What Do the Models Tell Us?’, Journal of Economic Literature, 51:3, 860–72, https://doi.org/10.1257/jel.51.3.860Google Scholar
Romanello, M., van Daalen, K., Anto, J. M., Dasandi, N., Drummond, P., Hamilton, I. G., et al. (2021) ‘Tracking Progress on Health and Climate Change in Europe’, The Lancet Public Health, 6:11, e858–65, https://doi.org/10.1016/S2468-2667(21)00207-3CrossRefGoogle ScholarPubMed
Shimbar, A. (2021) ‘Environment-Related Stranded Assets: An Agenda for Research into Value Destruction within Carbon-Intensive Sectors in Response to Environmental Concerns’, Renewable and Sustainable Energy Reviews, 144, 111010, https://doi.org/10.1016/j.rser.2021.111010CrossRefGoogle Scholar
Stern, N. (2007) The Economics of Climate Change: The Stern Review (Cambridge University Press).CrossRefGoogle ScholarPubMed
Thiault, L., Mora, C., Cinner, J. E., Cheung, W. W. L., Graham, N. A. J., Januchowski-Hartley, F. A., et al. (2019) ‘Escaping the Perfect Storm of Simultaneous Climate Change Impacts on Agriculture and Marine Fisheries’, Science Advances, 5:11, eaaw9976, https://doi.org/10.1126/sciadv.aaw9976CrossRefGoogle ScholarPubMed
United Nations (2022) ‘Net Zero Coalition’, United Nations, www.un.org/en/climatechange/net-zero-coalitionGoogle Scholar
Varga, J., Roeger, W., and Veld, J. in ’t (2021) ‘E-QUEST – A Multi-region Sectoral Dynamic General Equilibrium Model with Energy Model Description and Applications to Reach the EU Climate Targets, European Economy – Discussion Papers 2015’, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, September, https://ideas.repec.org/p/euf/dispap/146.htmlCrossRefGoogle Scholar
Vrontisi, Z., Fragkiadakis, K., Kannavou, M., and Capros, P. (2020) ‘Energy System Transition and Macroeconomic Impacts of a European Decarbonization Action towards a Below 2 °C Climate Stabilization’, Climatic Change, 162:4, 1857–75, https://doi.org/10.1007/s10584-019-02440-7Google Scholar
Wagner, G., and Weitzman, M. L. (2016) Climate Shock: The Economic Consequences of a Hotter Planet, Climate Shock (Princeton University Press), https://doi.org/10.1515/9781400880768Google Scholar
Weder di Mauro, B. (2021) Combating Climate Change: A CEPR Collection (London: CEPR Press), https://cepr.org/system/files/publication-files/Combating%20Climate%20Change%3A%20A%20CEPR%20Collection.pdfGoogle Scholar
World Bank (2021) State and Trends of Carbon Pricing 2021 (Washington, DC: World Bank), https://doi.org/10.1596/978-1-4648-1728-1Google Scholar
Zachmann, G., Fredriksson, G., and Claeys, G. (2018) ‘Distributional Effects of Climate Policies’, Bruegel. www.bruegel.org/sites/default/files/wp_attachments/Bruegel_Blueprint_28_final1.pdfGoogle Scholar
Zhao, Y., Sultan, B., Vautard, R., Braconnot, P., Wang, H. J., and Ducharne, A. (2016) ‘Potential Escalation of Heat-Related Working Costs with Climate and Socioeconomic Changes in China’, Proceedings of the National Academy of Sciences, 113:17, 4640–45, https://doi.org/10.1073/pnas.1521828113CrossRefGoogle ScholarPubMed

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×